Has C&W delivered on price and service? -- In a bid to tell its side of the story in the opening up of the Caribbean telecommunications market to competition, C&W Plc invited journalists to a presentation in Barbados. Ahmed ElAmin attended Bridgetown, Barbados -- Across the Caribbean islands a wave of resentment is building against the once favoured monopoly of telecommunications giant Cable & Wireless Plc.

And as Caribbean governments attempt to hammer out a new deal with the company, Cable & Wireless executives are using the legal squabbles that occurred in the Bermuda market as a warning of the pitfalls of unleashing competition.

From Trinidad & Tobago through to the Cayman Islands, governments have watched the opening up of competition in Bermuda with keen interest.

Encouraged by the example, other governments are now moving in the same direction to unseat the company from its privileged role.

As happened in Bermuda, Caribbean governments have signed deals with Cable & Wireless, in most cases giving the company a guaranteed monopoly position in return for providing telecommunications services (see table).

Now that relationship, which in some cases goes back for a century, is on uneasy grounds as governments question whether Cable & Wireless has delivered on its promise of price and service. As can be expected Cable & Wireless is not happy with the direction some of the islands have taken in the moves to unseat the company from its privileged role, claiming it has made significant investments in the region on the basis of agreements signed with the various governments.

In the process governments have launched verbal attacks on the company and customers have been unhappy. In St. Vincent & the Grenadines last year people even demonstrated in the streets against what they said were high prices charged by the company, and the company's general manager there resigned.

The company is currently negotiating with the Organisation of Eastern Caribbean States to reach a common ground on the individual contracts it has signed with each of the countries.

In other islands, as occurred in Bermuda, Cable & Wireless has engaged in legal battles with governments and competitors claiming the company's rights are being infringed.

In Jamaica, Cable & Wireless was in court last week in a suit claiming the government didn't have a right to grant an earth satellite licence to a local Internet company that wants to offer other services. In Dominica, Cable & Wireless disconnected Internet provider Marpin Ltd., claiming that the Internet company was infringing on its rights by moving to provide other telecommunications services. As its dominance seems set to erode and public resentment wells to the surface, Cable & Wireless has gone on a public relations offensive, promoting its history, its community support and services.

That offensive included a meeting between company executives and journalists, from around the region in Barbados this weekend, which The Royal Gazette attended. The company paid for the trip.

"We have been doing a lot in the region but we have failed to communicate that message to the people,'' Anguilla Cable & Wireless general manager Sutcliffe Hodge said in an interview after the meeting. "There was a disconnect between what we wanted to do and what the media thought we were doing.'' Widespread resentment against Cable & Wireless In talks with local Barbadians and regional journalists what is clear is that resentment against the company is widespread.

"People feel that they are not getting a good deal in terms of prices and services,'' a regional analyst who attended the meeting said. A Barbadian businessman who has had dealings with Cable & Wireless said the relatively high prices of services have led to much criticism in the community against the company. The businessman is in satellite telephone business.

"In training local people, and technically, they're the best,'' he said.

"But you have to ask why their service is so much more expensive than other companies.'' In response Cable & Wireless is saying that the high price of international services has subsidised the domestic rates, allowing affordable local service in small economies where the cost would ordinarily have been high.

The company said the strategy has resulted in Caribbean having one of the highest number of telephones per head of population in the world, and one of the most modern services.

"On average we have delivered 100 percent more telephone lines to Caribbean countries as other providers have done in economies of a similar size,'' a company brochure entitled The Plain Facts stated. The brochure is being handed out as part of the company's campaign to explain its strategy.

"In fact, many Caribbean nations have just as many telephones per head of population as do some of the world's largest economies. For instance, St.

Kitts has a similar penetration to Ireland and Holland.'' Even people remain sceptical. Islanders look at resentment at the low international rates their friends and family are paying in other countries.

Governments say high international rates are discouraging to business development in the region. (see price comparison table).

Cable & Wireless is also fighting a general feeling that the company has been plundering the region, making high margins by exploiting its monopoly. Except for Barbados, where the company must expose its books in public financial statements, Cable & Wireless generally keeps its earnings from the region a tightly held secret. The holding company's annual financial statement lumps the Caribbean and Bermuda as one region, with no individual breakdown by island.

In Barbados, which has a population of about 250,000, domestic provider Bartel had a profit after $11.5 million in taxes of $20.7 million on revenues of $154.5 million for the year ended March 31, 1998. Cable & Wireless owns 75 percent of Bartel, while local investors own the rest.

"I would love to have a balance sheet like BTC (Bermuda Telephone Co.) does in Bermuda,'' Bartel chief executive Trevor Clarke commented.

Another company executive told The Royal Gazette the company earned between a 12 to 20 percent return on assets in the Caribbean depending on the island.

The target worldwide was to get a 15 percent return on assets for shareholders.

"That is in line with top performing telecommunications companies,'' the executive said.

He added that for every $1 the company earned out of the Caribbean it currently continued to reinvest $1.50. The company planned on investing $1 billion in the Caribbean over the next five years.

That kind of corporate talk hasn't so far convinced Caribbean governments, who are calling for competitors to keep Cable & Wireless on its toes. The company has said that it is willing to compete but that it must be allowed to compete on what it calls a "fair and level playing field'', words it used in legal battles with the Bermuda Government.

Cable & Wireless wants to be allowed to compete with newcomers on an unrestricted manner, and it wants to lower the price of international calls while the local rates are raised to compensate.

In on going discussions with governments Cable & Wireless is citing Bermuda as a bad example of how to proceed, saying the failure of clear regulatory direction in the implementation of competition and lower prices has led to problems.

During the weekend meeting with journalists, the fate of Bermuda's Quantum Communications Ltd. was cited as an example of the possible consequences of introducing competition without adequate legislation, Cable & Wireless claimed.

Quantum, set up to compete with BTC is on the verge of failing unless other shareholders take it off the hands of the owners, Cable & Wireless and Belco Holdings Ltd.

Cable & Wireless Bermuda general manager Eddie Saints gave the opening presentation about events that occurred after the introduction of competition six years ago.

Key in the story was the Cable & Wireless suit for $100 million in damages against Government for what it claimed was an infringement of its monopoly licence without due notice.

Brought to the table by a litigious company Government agreed last year to let Cable & Wireless lower prices of international calls without being regulated by the Telecommunications Commission. The company said it needed the freedom to compete head to head with new entrant TeleBermuda International.

Mr. Saints said TeleBermuda had gained about a 30 percent market share in outgoing international calls, but Cable & Wireless still handled 90 percent of incoming traffic.

With Cable & Wireless' legal battles over, the focus in the market has now shifted to BTC. Mr. Saints claimed BTC has attempted to delay competition in the domestic market by failing to interconnect local provider Quantum to its network.

BTC has also fought Quantum and the Government in court over interconnection, and is due to appear in court again at the end of this month to contest Government's attempt to rebalance local and domestic rates. BTC has denied that it was using delaying tactics to prevent Quantum from operating.

"You get a sense of chaos here,'' Mr. Saints said. "There was a mad rush into it. Government didn't realise what it had to do. For example they didn't realise what was involved in the Cable & Wireless agreement.'' Mr. Saints said clear regulations outlining the rights and duties of telecommunications carriers would have prevented most of the disputes. He said further investments in Bermuda's telecommunications infrastructure was being held back by all the ensuring problems in the market.

"If the former Government had thought a lot more carefully about opening up the market to competition we would not have had these problems now,'' he said.

"They should not have rushed into it without laying down the rules and clearly deciding what goals they wanted to achieve. Quantum has been blocked out of competition. Quantum is a casualty.'' Ironically, a Jamaican journalist pointed out that what Cable & Wireless was claiming about BTC was being claimed by competitors in his island about Cable & Wireless and competitors' attempts to interconnect.

Mr. Saints said a round table meeting last week between Bermuda's telecommunications carriers and the new Progressive Labour Party was an attempt to solve the problems. He said Government had indicated that it wanted to put in place new legislation that would more clearly define the telecommunications marketplace.

"They are trying to demarcate and structure the industry,'' he said. "But although we have a new Government, a new Telecommunications Commission and a new Minister it's going to take some time.'' He advised other Caribbean governments to heed the problems in Bermuda and decide clearly how to go about getting lower prices and better services while maintaining investment. A clear framework outlining the roles of the carriers needed to be established first and a regulatory body set up that had the powers to make the regulations work, he advised.

"At least get the principle foundations in place and make it work and make it stick,'' he said.

Whether Cable & Wireless' version of events in Bermuda helps to convince governments to take a more conciliatory position, potential competitors can be sure no quarter will be given in the battle to maintain position in a lucrative market.

Price Comparisons Cost of one minute to US at peak rate through Cable & Wireless: Antigua & Barbuda -- $1.65 Barbados -- $1.52 Bermuda -- $1 Cayman Islands -- $1.82 Dominica -- $2.07 Grenada -- $1.67 Montserrat -- $1.78 St. Kitts -- $1.67 St. Lucia -- $1.85 St. Vincent -- $1.81 Turks & Caicos -- $1.75 plus 10 percent Government tax Cable & Wireless operations in Caribbean and Bermuda Anguilla -- monopoly on both international and local services Antigua & Barbuda -- International and mobile monopoly Barbados -- owns 85 percent of the international company and 75 percent of the local provider Bermuda -- monopoly on international service, 35 percent holding in domestic provider Quantum British Virgin Islands -- monopoly in international and local Cayman Islands -- monopoly in international and local Dominica -- 80 pecent ownership of company providing both international and local service; Government owns the other 20 percent Grenada -- owns 70 percent of company providing both international and local service; government owns the other 30 percent.

Jamaica -- owns 79 percent of the company providing international and local service, local investors own 21 percent Montserrat -- monopoly on international and local service St. Kitts & Nevis -- 65 percent ownership of company, 35 percent public ownership St. Lucia -- monopoly on international and local St. Vincent and Grenadines -- monopoly on international and local service Trinidad and Tobago -- 49 percent ownership, 51 percent Government Turks & Caicos -- monopoly on international and local service Talking telecoms: Cable & Wireless Bermuda general manager Eddie Saints at the Barbados presentation last Friday.

CALLING FOR CLEAR REGULATIONS: Edward (Eddie) Saints